ECB president Mario Draghi stated he would do "whatever it takes to preserve the euro". "To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate."
These are strong words and should make the speculation on what actions will be taken even more heightened. These types of comments add to uncertainty although the message is clear. Forget inflation, the job of the central bank will be to save the euro and drop those sovereign risk premium. The only policy will be to buy those risky bonds from Spain, Italy or any other country that cannot get their fiscal house in order. (The bond buying program was halted in March but it is likely it will begin again.) Though there are comments that countries have to get their fiscal house in order, these comments from Draghi seem like the fiscal side has the upper hand.